TaxTMI 
TaxTMI 
2007 (4) TMI 626
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....he laying down of a pipeline and associated facilities for Section-1 [Manmad in Maharashtra to M.P. Border near (Shirpur)] for Mumbai-Manmad Pipeline Extension Project of the respondent- Bharat Petroleum Corporation Limited (hereinafter referred to as 'BPCL'). The main issue was with regard to interpretation of Clause 91 of the contract which pertains to appointment of arbitrator. Clause 91 of the contract reads as under : "91. ARBITRATION All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof under this Contract or the right touching or concerning the works or the execution or the maintenance effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination foreclosure or breach of the Contract (other than those in respect of which the decision of any person is by the Contract expressed to be final and binding) shall after written notice by either party to the Contract to the other of them and to the Appointing Authority be referred for....
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....e settled through arbitration and the appointing authority i.e. the Director (Marketing) himself or he may nominate any other person of the Corporation to act as an Arbitrator to resolve the disputes and the vendor will not be entitled to raise any objection to such arbitrator on the ground that the Arbitrator is an officer of the Corporation or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the Corporation he had expressed views on all or any other matters in dispute or difference. Since some differences arose between the parties with regard to the claim of the appellant, a letter dated 21.7.2005 was written to the Director (Marketing) invoking clause 91 of the agreement and requesting him to refer the matter to arbitration for resolving the differences. It was also requested that the Director (Marketing) may accede to the request of the appellant for adjudication of the dispute by a former Judge of the Supreme Court of India so as to remove any justifiable doubts to the independence or impartiality of the said Arbitrator. It was further submitted that on receiving the communication, the appellant would suggest....
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....ted out that the whole action was done with urgency and there was no delay on the part of the Administration. Learned Single Judge after examining the matter came to the conclusion that it cannot be said that the appointing authority did not act with due dispatch. Learned Single Judge also held that as per the terms of the agreement in question with regard to independence and objectivity of the arbitrator can be examined in view of the agreement and it was observed that this question can be raised before the arbitrator and even if they fail, it can be agitated under Section 34 of the Act. However, learned Single Judge concluded that the situation had not arisen to invoke the provisions of Section 11(6) of the Act at present and consequently, dismissed the petition. Aggrieved against the impugned order dated 18.1.2006, the present appeal was filed. We have heard Shri Soli J. Sorabjee, learned Senior counsel for the appellant, and Shri Sudhir Chandra, learned senior counsel for the respondent, and perused the records. Though the application moved by the appellant under Section 11 of the Act was of course very confusing as it also mentioned Section 11(5) as well as Section 11(6) of th....
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....est by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. Therefore, the concept of thirty days is there in Sub-sections (4) & (5). This is in the event of the parties did not come to appoint arbitrator or the two nominated arbitrators fail to agree within thirty days for appointment of third arbitrator, application can be moved under Section 11(5) of the Act to the Chief Justice for appointment of arbitrator. But in sub-section (6), where, the procedure has already been agreed upon by the parties, as in the present case, and in that event, if a party fails to act as required under that procedure or the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure or a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may in that event, request the Chief Justice or a person or an institution designated by him to make necessary measures, unless the agreement on the appointment procedure provides other means for appointment of arbitrator. Therefore, so far a....
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....gatived the contention that 30 days should not be read in sub-section (6) of Section 11 of the Act if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues. Their Lordships in paragraph 20 have also very categorically held that in the present case the respondent made the appointment before the appellant filed the app1lication under section 11(6), though it was beyond 30 days from the date of demand, the appointment of the arbitrator by the respondent was valid and it cannot be said that the right was forfeited after expiry of 30 days from the date of demand. Their Lordships were also very clear in their mind in paragraph 21 and observed, "we need not decide whether for purpose of sub-sections (4) and (5) of Section 11, which expressly prescribe 30 days, the period of 30 days is mandatory or not. " We are only concerned with reading of 30 days within sub-section (6) of Section 11. So far as the period of 30 days with regard to Section 11(6) is concerned, there is no manner of doubt that their Lordships had not invoked 30 days as mandatory period under Section 11(6) and beyond that it cannot be invoked by....
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....but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases." The /aforesaid quotation would clearly reveal that the crucial words in paragraph 5 were not quoted in the aforesaid case which has been reproduced above. Our attention was also invited to a decision of this Court in the case of Union of India v. Popular Construction Co. [(2001) 8 SCC 470]. This was in relation to Section 34(3) of the Act. This is with regard to the period of limitation for moving the Court under Section 34 of the Act for setting aside the award i.e. the period of limitation was prescribed in Section 34 itself. Therefore, Section 5 of the Limitation Act was not made applicable. This is not the case before us in the present controversy. Our attention was also invited to a decision of this Court in the case of The State of Uttar Pradesh & Ors. v. Babu Ram Upadhya [(1961) 2 SCR 679]. In that case, their Lordships have dealt with the interpretation of the statute and they have referred to "Statute Law" by Craies and "The Interpretation of Statutes" by Maxwell. Their Lordships have quoted....
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.... the period of 30 days was not decided. In this connection a reference may also be made to a decision of this Court in the case of Union of India & Anr. v. M.P.Gupta [(2004) 10 SCC 504]. In that case, arbitrator was appointed by the High Court directly a Judge of the High Court because no arbitrator was appointed by the Railway Authorities as per Clause 64 of their agreement. Their Lordships after considering the matter observed that the appointment of arbitrator by the High Court under Section 20 of the Arbitration Act, 1940 cannot be upheld in view of Clause 64 of the agreement because as per Clause 64 of the agreement, two arbitrators have to be appointed who should be gazetted railway officers. Therefore, as per the terms of the agreement their Lordships held that the appointment of arbitrator by the High Court was not correct and set aside the order and directed the Railways to appoint arbitrators within 30 days. Similar issue came up before this Court in Union of India & Anr. v. M/s. V.S. Engineering Pvt. Ltd. [2006 (12) SCALE 144]. This Court after considering the decision in Union of India & Anr. v. M.P.Gupta [(2004) 10 SCC 504] and Datar Switchgears Ltd. (supra) directed t....